Manual trading errors such as the one described in the Bloomberg article referenced HERE can essentially be eliminated by implementing business rules within the Trade Order Management System (“TOMS”) / Execution Management System (“EMS”), that a given bank has installed (years ago TOMS and EMS were separate systems but today typically are a single system). A second fail safe is to have one or two people review trades above a certain threshold after they have been loaded into the system.
Rather than place the clerk on leave, Citi should have fired the head of equity/fixed income trading. The issue is that too many Financial Services executives are Technology-averse, particularly at large institutions. The same can be said for the CEOs.
25 years from now these large, legacy banks and their archaic processes will be displaced by FinTech firms (we already know some of the candidates – Block and PayPal are two), that offer a variety of Financial Services to a broad swath of customer cohorts. These FinTech firms will have superior business models – everything from superior go-to-market approaches to superior customer analytics & retention to superior account & revenue growth to superior profitability and earnings growth. It’s happening now.